What are the Major Currencies in Foreign Exchange?
Let’s learn about Major Currencies. Although the foreign exchange market is often billed as a banker’s game, currencies can sometimes be a great way to diversify a portfolio that might have hit a bit of a rut. It’s a market that can also offer tremendous opportunities when other global forums enter the doldrums. As a result, knowing a little bit about forex, and the fundamentals behind it, can make significant additions to any trader, investor, or portfolio manager’s arsenal. Let’s take a look at eight currencies every trader or investor should know, along with the central banks of their respective nations.
- The Bank of Japan governs monetary policy as well as currency issuance, money market operations, and data/economic analysis.
- The Bank of England has a Court of Directors or governing body appointed by the Crown. It also has a Monetary Policy Committee headed by the governor of the bank.
- The Swiss franc, the Canadian dollar, the Australian and New Zealand dollars, and the South African rand round out the list of top tradable currencies.
- The U.S. dollar is the home denomination of the world’s largest economy, sometimes referred to as the greenback.
- The European Central Bank holds the right to issue euro banknotes as it sees fit, while policymakers can interject at times of bank or system failures.
Following are the major traded Currency
EUR/USD: The euro and the U.S. dollar
USD/JPY: The U.S. dollar and the Japanese yen
GBP/USD: The British pound sterling and the U.S. dollar
USD/CHF: The U.S. dollar and the Swiss franc
Practice Questions
1. What are the major currencies in foreign exchange?
A) USD, EUR, GBP, JPY, CHF, CAD, AUD, NZD
B) USD, EUR, JPY, GBP, CHF, AUD, CAD, HKD
C) USD, EUR, JPY, GBP, CHF, CAD, AUD, CNY
2. Which currency is the most widely traded in foreign exchange?
A) USD
B) EUR
C) JPY
3. Which currency is the official currency of the European Union?
A) USD
B) EUR
C) GBP
4. Which currency is often referred to as the “safe haven” currency in times of market volatility?
A) USD
B) EUR
C) CHF
Answers:
1. A
2. A
3. B
4. C
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